Gold is fairly easy to understand, which is its strength really. To make it more complicated the FED keeps intervening in the market. This is done to scare the people who have no conviction. The problem is that the Asians don't fall for that trick. India and China this year will buy virtually all gold produced in the world. Since other people also buy, I can't understand where all that gold will come from. Most likely from Western Central Bank reserves.

Your argument is just silly. First of all, gold is not an end in itself. The rich people are the ones that come up with business ideas and new products or at least use other people's ideas to start businesses. Gold, generally speaking, doesn't make you wealthy but is a good way to store some of your savings away from the grabby hands of money printers like B.B.Zimbabwe is a really poor example. If you lived there and had gold, you would be well protected from their inflation that was caused by crazy money printing. So, it actually worked very well there but only for the people who had gold.

I said ''if you understand the fundamentals''. If you view gold like B.B. pretends to view it, then stay away from it. All I am saying is that it is not a good think to trade but is only for people with strong stomachs and long term convictions.

The Fed will trim its asset purchase program to $65B/month from the current $85B pace beginning in September, according to a growing number of economists polled by Bloomberg. "The markets have adjusted," says one respondent. "Investors believe it won't be a strong negative for the markets or the economy." [View news story]

The one thing to remember about QE infintity is that it is going on automatically and to change it the majority of voters on the FED committee need to vote for any such changes. This makes it much harder to taper, which is why this structure was put in place to begin with.

More on the big Richmond Fed miss: New Orders tumbled to -15 from +9. Shipments to -15 from 11. Backlogs -24 from -1. Employees unchanged at 0. Average workweek +2 from +11. Expectations look a little better, with New Orders and Shipments both higher in July than June. (full report) [View news story]

It is like a snowball gathering steam ... melting in front of our eyes that is.

ETF's are indeed to be avoided for the most part. They are just used by J.P. Morgan and their friends to manipulate the market and you can't even take your gold there. Having some small position would be ok I guess but better stay away from that.

The one thing to mention is that I would totally ignore technicals to buy/sell gold. The reason is that the market is massively manipulated and the manipulators pain pictures to convince short term traders to do this or that. So, ignore technicals but if you understand the fundamentals behind gold, and they have never been so good, buy some at the lowest prices possible. That is all.

The only lesson to learn is this. It is better to buy at lower prices than at high prices, just like the Chinese and Indians try to buy their gold. The idea that you should buy when prices go up and are more expensive is ludicrous but this is how most commodities traders following charts without understanding of the fundamentals trade.The reason for the recent hit that gold tool was a massive intervention by the FED to prove point 2 above.They unleashed huge buying in China and India and a few other places so that intervention has backfired.

The Fed will trim its asset purchase program to $65B/month from the current $85B pace beginning in September, according to a growing number of economists polled by Bloomberg. "The markets have adjusted," says one respondent. "Investors believe it won't be a strong negative for the markets or the economy." [View news story]

The Fed doesn't want to taper at all but they may have to to keep some sort of confidence in the money printing system. I personally think that they will not cut but who knows. In case they cute by more than 10%, they will reverse that relatively quickly.

More on the big Richmond Fed miss: New Orders tumbled to -15 from +9. Shipments to -15 from 11. Backlogs -24 from -1. Employees unchanged at 0. Average workweek +2 from +11. Expectations look a little better, with New Orders and Shipments both higher in July than June. (full report) [View news story]

Does that mean that instead of tapering we are going to get a bigger QE infinity at 100 billion per month?

It used to be illegal to import gold in India. Still, they bought a lot. It was clever of the government to make it legal and a part of the official economy. This is of course more efficient and they also collected taxes. With the current regime we are going to see 0 gold imported officially and all gold will be imported through unofficial channels. The police, border patrols and politicians will take their cut but still the consumer will get cheaper prices than what is otherwise available. Given the huge corruption in India, the unofficial channels can be set up very quickly by the right people with the right connections.

What the RBI does is becoming irrelevant. Last reported month the amount of gold imported in India was down 80%. Supposedly the demand was down like 20%. This implies that the rest was smuggled in. To understand gold demand in India now one has to look at the following:1. Indians love gold and that is not going to change.2. They view the current price as low and will buy as much as they can afford.3. India is mega corrupt and informal channels to import gold are being set up as we speak. I am talking about channels involving the local police, border officers and politicians, not some risky operation with people crossing through risky areas. Everybody will take a cut but the total charge will be say 1/2 of what the government wants to take. So, the consumer will benefit and get cheaper gold as well. This will kill the official channels and the government can report 0 gold imports while in reality imports will be just as high.4. The Fin Min has been pleading with the population to stop buying gold. I bet that at the same time his wife is out shopping for gold.What will happen is that the amount of gold purchased by Indians will become less and less transparent. The MSM will say that the demand has been killed. I think that the entire gold market will become less and less transparent as people shift from ETF's to physical and places like India shift to trading in the black market. Again, the MSM will claim that the demand is dead, while the demand will actually be higher. Eventually prices will go much higher. Just focus on the fundamentals (they have never looked so good), ignore the pundits and fools and decide your appropriate allocation to gold. Short term trading is not likely to make money due to the rampant manipulation sponsored by the FED, so ignore technicals and just stay the course.